However, the previous landlord permitted them to take over an additional 3,000 square feet on the second floor, which is now filled with inventory and unusable for other purposes.While this tenant has been reliable and has a long-standing relationship with the property, their occupancy of this extra space is limiting our ability to maximize rental revenue.

I live in the SF Bay Area and have decided to buy my first single-family home.I fully acknowledge and recognize that the SF Bay Area and California (in general) may have some of the worst cash flow numbers in the entire country.I've already traveled to cheaper Midwestern states to look at real estate opportunities, but have decided to invest here in the SF Bay Area as I'm purchasing with the intention of living in it first and foremost, and then renting it out sometime in the near future when I move overseas.I'm looking for anywhere in the Greater Bay Area/Northern California region (even Sacramento & Central Valley is okay) with better than average purchase price to rent ratio, and some appreciation (if possible). 

Terms for the seller 2nd have generally been 5%, interest only, 5 years.I'm only considering properties under this scenario that cashflow well immediately, in addition to having a strong value-add element.

At this stage in my investing career I don't buy things that don't cash flow, so if the fixer upper is going to bleed cash until it's fixed, I wouldn't invest in it. 

Purchase price: $212,000 Cash invested: $67,000 Great starter investment home. 70% ROI What made you interested in investing in this type of deal?

Purchase price: $28,000 Cash invested: $40,000 Bouight this property in one of the worse street in this town.

Don't fall for the cash flow trap. 

Real estate is a long game.

This helps demonstrate that the property was acquired with the intent of being a long-term investment, rather than just a quick flip, which is important for the 1031 exchange to qualify.That said, each situation is unique, and there are exceptions.

However, here's a general guideline that you might consider:Stocks: 50-60%Stocks offer the potential for long-term growth and can help protect against inflation.